As regulators complete new mortgage rules, banks are about to get a significant advantage: protection against homeowner lawsuits.

The rules are meant to help bolster the housing market. By shielding banks from potential litigation, policy makers contend that the industry will have a powerful incentive to make higher quality home loans.

But some banking and housing specialists worry that borrowers are losing a critical safeguard. Industries rarely get broad protection from consumer lawsuits, and banks would seem unlikely candidates given the range of abuses revealed during the housing bust.

A lot of bad things are done in the name of expanding access to credit, as we found out, said Sheila C. Bair, former chairwoman of the Federal Deposit Insurance Corporation and now a senior adviser to the Pew Charitable Trusts.

The legal protection stems from the Dodd-Frank Act, the sweeping regulatory overhaul passed in 2010 to help repair the financial system.

The legislation mandated that loans be affordable, but Congress conceded that banks might fear the legal consequences if the mortgages did not comply. So lawmakers created a type of home loan that would have legal protection, called a qualified mortgage. In practice, the protection will make it harder for borrowers to sue their lenders in the case of foreclosure.

A woman in Tualatin, Ore., says she’s at the end of her rope fighting a three-year battle with Wells Fargo for mistakenly stating she has missed mortgage payments on her home, which is now in foreclosure.

Dee Dingman, 79, and her late husband moved into their four-bedroom home in 1967. After her husband, Leland, died in March 2008, Dingman took out a new mortgage while she paid off his medical bills, never missing a payment. Court records show she promised to pay $308,000 plus interest on June 16, 2008.

The next year, after Wells Fargo’s acquisition of Wachovia was completed in Jan. 2009, Dingman began receiving foreclosure notices. She believes the bank did not corrrectly process her payment since around Oct. 2009. But her bank records show her mortgage payments have been deposited by Wells Fargo. Despite efforts to clear up the mistake and paying nearly $12,000 in attorney fees, her home is now in judicial foreclosure.

“I’m really very tired of it,” said Dingman. She has been employed by the local Kmart since it opened 40 years ago but stopped working when the store closed last month.

She continues to pay her monthly mortgage amount of over $2,300 while paying an attorney to help her clear up the mistake.

Read more: 10 Most Expensive and 10 Most Affordable Housing Markets

Tom Unger, spokesman for Wells Fargo, said the bank is trying to get to the bottom of the matter and no foreclosure sale is scheduled.

“We are very sensitive to Mrs. Dingman’s concerns but there are some details regarding her loan that still need to be addressed,” he said. “There is no foreclosure sale scheduled, giving us additional time to work with our customer.”

This is not the first time Wells Fargo has been involved in an error over a foreclosed home. The bank’s contractors mistakenly cleared out the home of a retired couple twice in Twentynine Palms, Calif., after confusing it with a neighboring foreclosed home.

The bank said it has worked with Dingman “since 2009 to identify options that would allow her to stay in the home.”

Dingman said there has been no cooperation from the bank.

“This is going on too long,” she said. “I just keep paying lawyers and I think it’s time to end this. It’s using quite a bit of my money and time. I just don’t need this and they don’t need it.”

“Foreclosure is always the very last option we explore with any customer,” Wells Fargo said in a statement. “We feel foreclosure is bad for the customer, bad for their neighborhood, bad for their community and bad for us as the lender. Our goal is to keep our customers in their homes, have them pay off their loans, and own their homes outright. Given that there is active litigation around their loan we can’t discuss the case in any more detail at this time.”

Though she is in good health, Dingman’s family and friends are concerned that stress from the possibility of losing her home is beginning to take a toll.

“Both I and, more so, her family have been very concerned for her health,” her family friend, Sue White, said. “She’s been really emotionally affected by this with a lot of crying and a lot of anguish. It’s really interrupted her joy in life at this point, as you can imagine.”

For these past few years, her payments were considered missing even though she has checks that have Wells Fargo’s stamp on the back after they have been deposited, said Dingman.

“She’s tried for many months to get this straightened out with them,” White said, though Wells Fargo has failed to provide her a single point of contact.

When White and Dingman visited a Wells Fargo Branch to try to clear up the matter, they were directed to talk to a representative over the phone, White said. That person said the bank could not discuss the matter with her because her home was in foreclosure.

In the spring of 2011, Dingman wrote a certified letter requested Wells Fargo to send her a payment history. She said the bank provided her with a payment history two months ago.

According to court records, Wells Fargo states that Dingman’s unpaid principal balance is $299,672.08.

Dingman and her family are hoping the matter is resolved soon and she can continue living in the house.

“I love my home. I love my outdoors. If I was ill, sick or crippled, it would be different,” she said. “I have my life and I want to live my life.”

If the bank got the money the underlying civil case should be an open and shut affair in court. However she’ll probably not get a dime’s worth of consideration for the needless harassment she underwent. It sounds at most like something really petty, like a mistaken loan number, but the bank all along was getting her checks and accepting the money.

10
posted on 12/19/2012 7:22:00 PM PST
by HiTech RedNeck
(How long before all this "fairness" kills everybody, even the poor it was supposed to help???)

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